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Cargo carrier gets the OK to operate with Philly Shipyard vessels to Hawaii

The shipyard will build up to four new container ships to take goods to Hawaii.

Aerial view of the Philly Shipyard
Aerial view of the Philly ShipyardRead morePhilly Shipyard

Philly Shipyard is building as many as four new container ships to carry goods between the West Coast and Hawaii. That state's governor last week gave the green light for a third cargo line to use two piers in Honolulu Harbor, paving the way for the Philadelphia-built vessels to deliver food, autos, and other goods to Hawaii.

In August, the shipyard announced that Tote Maritime would be its partner in building the container ships. Based in Princeton, Tote operates ships between mainland United States and Puerto Rico and Alaska. Tote would be the third container carrier to serve the Hawaii route, in competition with Matson Inc. and Pasha Group.

Philly Shipyard, formerly called Aker Philadelphia Shipyard, has spent $75 million on parts to begin construction of the four vessels, which will provide work for 1,200 employees at the South Philadelphia shipyard through 2021.

"This achievement means there will be more shipping options for the business community throughout the state, which lends itself to competitive pricing and lower costs for consumers," said Hawaii Gov. David Ige. "We are modernizing Honolulu Harbor with much needed infrastructure improvements and creating space for a new service to enter the market while expanding terminal capacity for the entire shipping industry."

Tote's effort to become a third freight operator into Hawaii was dependent on harbor access.

"It was an important milestone last week," said Steinar Nerbovik, president and CEO of Philly Shipyard. "All the competitors were discussing back and forth if there was space for a third carrier. And now, we have secured the harbor access. We'll be able to build four more container ships for Tote, and that will give 1,200 workers in Philly Shipyard work for another four years. This is fantastic for us."

Currently, some U.S.-flag container ships transporting a mix of cargoes to Hawaii are old steamships that by 2020 will not meet tighter emissions standards.  The new vessels will be fuel-efficient and environmentally friendly.

"This decision ensures we have a working terminal to begin service and advances Gov. Ige's vision for improved infrastructure and a stronger economy," said Tote president and CEO Anthony Chiarello.

Philly Shipyard currently is building two 850-foot-long container ships for Matson Navigation Co. of Honolulu. The ships, which are capable of moving 3,600 20-foot containers at speeds greater than 23 knots, will be completed in 2018 and 2019.

The first two ships for Tote will be completed in 2020, and the second two in 2021. They are being designed to meet current and future market trends for larger-sized containers and faster transit times, and will be capable of running on liquefied natural gas fuel, officials said.

Philly Shipyard, the nation's second-largest commercial shipyard after General Dynamics Nassco of San Diego, builds oceangoing vessels in accordance with the U.S. Jones Act, which requires U.S.-made and U.S.-operated vessels to transport goods among U.S. ports.

In 2020, when stricter emissions regulations take effect, several older steam-powered vessels serving the Hawaii trade route will not comply. Philly Shipyard has said the circumstances created a "unique opportunity" for a new carrier to enter the Hawaii container market.

The shipyard has built and delivered 27 ships in its nearly 20-year history, including four for use in the Hawaii containership trade between 2003 and 2006. Currently, the shipyard is building one 50,000-deadweight-metric-ton tanker for a subsidiary of Kinder Morgan Inc.